Crisis in the World Order: The Result of Three Major Transformations

The Brexit referendum, Trumpism in the United States, the Middle East saga, the European refugee crisis, unceasing terrorism, populism in Latin America swinging from left to right, rising political extremism, and Asian geopolitical disputes are events that we are experiencing today.

All these point to the fact that today’s world order is indeed in big trouble. In fact, we are facing problems in world order and governance both domestically and diplomatically. Crises in internal order and governance are the result of the decline of political authority.  As the British philosopher Thomas Hobbes said, order is built by authority, and there can be no order without authority. A decline in political authority will inevitably lead to a crisis in internal order. Moreover, international order and domestic affairs are interdependent and closely intertwined in today’s world. The disintegration in the Middle East that led to the European migrant crisis has greatly exemplified how internal crises can lead to a world crisis. On the other hand, external forces can bring disorder to internal governance, and the disintegration of political power in the Middle East was a result of external intervention. The Brexit referendum is also a response to the adverse development of the European Union (EU).

How does crisis in world order and governance take place? Simply put, the so-called order refers to the relation between government and society as well as the relationship between the elite and the mass public. From this point of view, one can think of today’s crisis as a result of three major transformations. The three transformations began since the Second World War, accelerated after the end of the Cold War, and have lasted till today. What are the three transformations?

The first transformation is the transformation from the national to the global economy. To a large extent, the globalization of capital markets has been ongoing. The so-called national economy is the economic sovereignty that a country enjoys. In the long phase of the national economy, economic relations focused mainly on trade and investment. Although benefits reaped from foreign economic activities were not fairly distributed among different social groups, governments were able to carry out social transfers to compensate the social classes that lost out through taxation and other mechanisms.

Entering the age of the global economy has caused all countries to lose their effective sovereignty over capital, or even have no sovereignty. Today, only a few closed economies like North Korea can be deemed as a sovereign economy in the traditional sense. In the era of the global economy, capital is free from political and social constraints and has a high degree of autonomy. The globalization of capital markets can be realized even if it encounters political and social resistance. Through globalization, immense interest from economic activities flow to capital or members of the capital market, forming what the West has dubbed as “the rich economy.” Governments are put in tight spots as they have no control over capital. Government revenues plummet as the tax base shrinks, and it becomes difficult to achieve social equity through traditional income distribution methods.

The social order of a country is safeguarded by the middle class. Today, however, the global economy has hit the middle class. This can be seen in their employment. The middle class in the West today were industrial workers in the early days. Two factors from globalization has changed their employment situation. First, the flow of technology. In the era of the national economy, technology generated employment, then led to the rise of industry, producing employment for skilled workers. However, in the era of the global economy, there has been a fundamental change. In order to gain maximum benefit, capitalists exported technology to other countries and regions, instead of generating employment for skilled workers in the domestic market. Notably, for a long period of time, the United States employed Chinese workforces in China’s Pearl River Delta region and other places, instead of workforces located domestically in the US. Second, regionalism and globalization have led to flows of labor from less developed to developed countries. Labor flows can be illegal, like the refugees in Europe, or legal like labor mobility within the EU. While labour mobility makes sense from the economic perspective, it creates significant negative impacts in the social perspective on the domestic labor markets in the developed countries.

Technological progress today threatens to give a fatal blow to employment. The era of technological advancement creating employment has passed. Today, not only does technology not generate employment, it even reduces employment. This is best exemplified by the development of artificial intelligence. The Economist has devoted its recent issue (June 5, 2016) to the topic of artificial intelligence. A study suggests that in the next ten to twenty years, up to 47 percent of all jobs in the US could be automated. Even under conservative estimates, this figure may reach ten percent of the total workforce.

The second transformation is the transformation from elite to mass democracy. In the last two hundred years of Western democratic history, it was elite democracy that dominated, which Marx called bourgeois democracy. The mass democracy that we witness today began in the 1970s. In the early stages of elite democracy, the government was merely an “agent” of capital, as described by Marx. In the later stages of development, governments employed conservative social policies to ensure the smooth functioning of capital. Generally, under elite democracy, capital and political interests tended to converge. But after entering the age of mass democracy, political interests and the interests of the capital began to diverge. Elite democracy saw the combination of capital and politics, while mass democracy sees the combination of political and social forces.

The positive result of this transformation is the change of social policy from social protection to comprehensive welfare. In a welfare society, democracy and welfare are inseparable. Democratic elections are often seen as “welfare auctions” run by political figures. Without much contemplation, voters who are supposed to be rational vote for political figures or parties that offer the most welfare benefits. Social policy also has a great impact on how capital operates. Social policy restricts and regulates capital not only through high taxes, but also in other aspects including environmental protection, security, etc. Facing all kinds of constraints and regulations, capital started flowing out from society. In this sense, capital flight can lead to globalization. Clearly, globalization in the 1980s was driven by capital. This dynamic is likely to continue in the future.

The third major transformation is the shift in the focus of knowledge from the world to the local, and from the macro to the micro scale. Western knowledge has played an important role in social transformation since modern times in constructing new political philosophies and ideas. It is difficult to contemplate the progress that we have made without the growth in knowledge. However, today’s intellectual property has shrunk. Knowledge is heavily influenced or even manipulated by political power and capital. The study of social science no longer addresses public needs, but instead just caters to politics and capital. Politics and capital markets determine what to and what not to study.

With knowledge locked in the cages of politics and capital, professors and researchers lose their ability to think.
As Thomas Phillip O’Neill (Speaker of the US House of Representatives in 1977) said, local politics prevails in all politics in the era of mass democracy. During the time when elites dominated, political elites with a global vision tended to take the international environment into account when making decisions. Now, however, all politics has been localized under mass democracy. This has had a profound influence on the academic sector. For decades, western academia seldom reflected on their democratic system. They lost the spirit and courage to rethink democracy and instead ended up as political tools for the advancement of democracy. The only research related to the development of the democratic system was the research on identity politics which has been pushed to the fringe in academic circles.

Knowledge transformation can affect real politics. Today, identity politics has reached a peak in both western and non-western societies. Identity politics, while strengthening people’s local identity, causes them to lose their general perspective, and evolves into extreme forms of populism. Domestic issues, regardless of how trivial they are, have become so important that they can outshine international affairs. Under identity politics, political space is shared among different parties, and social space is divided between different social groups. Radical individualism prevails over social collectivism. Political parties, environmental groups, and animal welfare groups have become highly politicized and radicalized.

Not too long ago, the brutal killing of a stray dog by Taiwan marines sparked a public uproar in Taiwan. This incident explained clearly the phenomenon of political localization. Taiwan’s Defense Minister issued a public apology after scores of animal welfare activists staged a protest outside the ministry. A video clip of the Navy Commander and nine military personnel bowing in apology was circulated on Facebook. The Navy Command Headquarters then punished the nine military personnel who were involved in this incident. Among them, three soldiers who allegedly carried out the killing were penalized, with two of them given a major demerit, removed from their posts, and handed over to law enforcement authorities. Another six superior officers were also punished for their negligence in supervising their subordinates. The fact that this local incident caused a big furor and captured more attention than other major events surprised many people.

To a certain extent, some forms of terrorism are related to identity politics. There are young people who self-radicalize and join terrorist groups after identifying themselves with certain political or religious concepts. In Western society, young people who self-radicalize are those who reject Western values when choosing their own identities.

The influence that capital has on the transformation of academic research is even greater than that of politics. This is because capital contributes to research funding. Research funding, which is seemingly open to all, is tightly controlled by research goals. Any research that is in favor of capital will receive generous grants. On the other hand, research topics that are not in favor of capital will be banned. Through this incentive mechanism, capital has subtly changed the research goals of researchers. At the same time, with capital, politicians can preside over academic research. There is no essential difference between how professors and workers are assessed today. To a certain extent, many universities today have become institutes that are driven by capital, integrating academic research within the capitalist field.

With knowledge locked in the cages of politics and capital, professors and researchers lose their ability to think. They focus their discussions at the micro level and no longer ask important questions. They do not question the direction of social development, neither are they able to solve social problems. For decades, despite the rapid development of the social sciences, great social scientists of the past like Adam Smith, Karl Marx, and Max Weber can no longer be seen. Professors and researchers have become craftsmen who indulge themselves in research without any direction or objective in mind. In this case, politics and capital will walk on the path of “ideological domination,” as described by the Italian Marxist Antonio Gramsci.

Today, these three major transformations continue unabated at an accelerating pace. It is foreseeable that we will suffer from a crisis in the world order, unless we are able to slow down or reverse these transformations. It is up to us, whether to go back in history to the era of Hobbes or to make a change to rebuild the world order.

(Translated by Wen Xin Lim)